Disadvantages Of Private Banking

Confidential is the main benefit and characteristic of private banking. Banks provide customer dealings and services to HNWIs using anonymous. This anonymous approach has had the stigma of underhanded dealing in the past, but now most modern banks prefer to keep their activities with exclusive customers unpublicized for different reasons. Banks provide the clients with proprietary products, which are kept confidential to prevent competitors from selling similar products to the same clients. Also, the culture of privacy has the potential to attract new customers since they can protect customers personal information. Sometimes, HNWI is subjected to lawsuits involving their investments and keeping such information confidential gives them a sense

Potential competitors to the market like Alibaba, Google and Facebook have not yet planned to step into the financial industry, but they have already held e-money licenses. Since a large population are using these companies’ platforms, they have already collected a big amount of data about user’s habits and preferences, and that they could use big data to enter the financial service sector at any time and they can become the biggest competitors of modern financial institutions. Some smaller technologically advanced entrants have become successful in many economies in FinTech. Some companies compete with traditional financial institutions to sell financial services directly to customers. Even though these companies have the ability to come out with their own technology and security systems which perfectly suited to the financial services industry, they never build up a long-term and trusted relationship with clients which private banks have developed over the years with their HNWIs clients, and this the core of the banks’ competitive

There are still a lot of ‘traditional’ clients who prefer the existing RM-based model(RM refers to relationship manager). However, most new generation HNWIs clients have other needs, beyond the traditional way of service — and they have rapidly evolving expectations that digital services and real-time financial information will be involved. To attract more HNWIs clients, we believe that private banks, of all models, will find new areas to provide differentiation in the future, put more effort on rapid product and service innovation.

Nowadays customers have a historic reliance on transactional banking and prefer to spread their assets across multiple banks and their own investments in order to lower the risk they may face . This will require technology investment, cultural change and upskilling to enable deeper segmentation, multichannel integration, and better lead generation and management. Multichannel is key point to more and more potential customers decide to rely on your banks, digital model that meets customer expectations of options, speed and transparency. The shift will give those entrepreneurial customers becoming more self-directed and relying less on their RMs. But it does not mean that RM will not giving any help anymore. For other will require their RM to interact with them and provide account updates “on the go” with relevant, real time information. In this way, customers will have options to